More on Related Themes
2013-05-24 4 Market Risks Worth Worrying About by Russ Koesterich of iShares Blog
The risk of a US slowdown Not discounted in US valuations. While US valuations currently look reasonable, they’re predicated on a US economy growing at around 2% to 2.5%. The risk of slower growth is not priced into the market. If US economic data continues to disappoint, and we get a growth hiccup in the second or third quarter, then we’re likely to see some US market weakness.
2013-05-22 When Will the U.S. Economy Stop Slowing Down and Start Speeding Up? by Marco Pirondini of Pioneer Investments
As earnings data from companies comes trickling in, it all but confirms a slowdown in the second quarter.
2013-05-21 Capitalism and Democracy by Bill O'Grady of Confluence Investment Management
In the Italian elections, the party that showed the strongest results was the Five Star Movement, led by the comedian Beppe Grillo. Despite this strong showing, the party failed to form a government and refused to participate in any coalitions. This decision not to participate in the political process has been exhibited by other protest groups, such as Occupy Wall Street, the Israeli Tent Movement, and the Spanish “Indignant” movement.
2013-05-20 Could Syria Spiral Out of Control? by Charles Lieberman of Advisors Capital Management
Events in Syria keep deteriorating, with potentially serious economic consequences for the Western world. Russia and Iran are intervening ever more actively to defend their national interests by propping up Bashar al-Assad, their ally. New weapons systems are about to be delivered that could alter the local balance of power and set off a wider military struggle that could envelop surrounding nations. So far, none of the direct participants in the fighting are meaningful suppliers of oil to global markets.
2013-05-18 All Japan, All the Time by John Mauldin of Millennium Wave Advisors
This week we again focus on Japan. Their stock market has been on a tear, and their economy grew 3.5% last quarter. Is Abenomics really the answer to all their problems? Is it just a matter of turning the monetary dial a little higher and voila, there is growth? Why doesn’t everyone try that? And what would happen if they did?
2013-05-09 Equity Market Distortions Create Big Payback Potential by Joseph Paul, Kevin Simms of AllianceBernstein
Even after this year’s equities rally, market imbalances created by the financial crisis in 2008 have not disappeared. When these distortions unwind, we expect deep value stocks to rapidly recover.
2013-05-07 Global Bonds: A Flexible Solution for an Uncertain Market by Olivia Albrecht, Michael Story of PIMCO
The recent rallies in both safe-haven and risk assets have left many investors in a quandary. We believe alpha, or above-market return, will have to play a greater role for investors seeking to meet return targets. In our view, the current environment affords many opportunities for generating alpha.
2013-05-06 Dispelling Dollar Doubts by Milton Ezrati of Lord Abbett
Will the U.S. dollar, almighty no longer, be supplanted as the world’s reserve currency? Not anytime soon.
2013-04-26 Financial Repression: Why It Matters by Shane Sheperd of Research Affiliates
Financial repression refers to a set of governmental policies that keep real interest rates low or negative, with the unstated intention of generating cheap funding for government spending. The ramifications of these policies will be measured in decades, not years.
2013-04-25 Value Investing and the Philosopher's Stone by Kevin Simms, Joseph Paul of AllianceBernstein
When J.K. Rowling finished her first manuscript of Harry Potter and the Philosopher’s Stone in 1995, she submitted it to 12 publishers, who all rejected the book. In time, those publishers would regret missing the chance to back an unknown author who would later take the world by storm. Like the publishers who passed over Harry Potter, we believe that many investors today risk missing a historic opportunity to invest against the grain in attractively valued stocks across the globe.
2013-04-25 Living in Lake Wobegon by Jim Goff of Janus Capital Group
Are we normal? For many quarters, I have counseled investors that we are going through extreme market conditions and that patience was the best strategy. As the panic fades in the rear-view mirror and the road ahead looks less bumpy, I stand by the advice. But I don’t need to repeat it.
2013-04-17 Present and Emerging Risks to the Gold Trade by Amit Bhartia, Matt Seto of GMO
The notion of gold as a hedge against systemic risks is flawed. We believe that the concept of gold’s role as an insurance policy needs to be narrowed significantly.
2013-04-10 Don't Pay Too Much for That Bordeaux - Or That Bond by Jeff Helsing of PIMCO
The financial market’s reliance on ratings agencies and benchmarks, along with regulations, can cause distortions in the value of some securities. These price distortions can create potential opportunities for some investors. Investors should consider aligning capital allocation with outcome-oriented objectives that aren’t influenced by credit ratings or benchmarks.
2013-04-05 What's Next for U.S. and European Markets? by Mike Temple of Pioneer Investments
I was asked recently to provide some color around the state of global fixed income markets as we close out the first quarter of 2013. Of course, one of the more watched situations in the global markets has been Cyprus’s banking crisis. I won’t go into too much depth on the subject here, as my colleague, Cosimo Marasciulo, has recently provided a comprehensive analysis.
2013-04-04 Teachings from Recovered Markets by Richard Michaud of New Frontier Advisors
Domestic indices’ all-time record highs indicate that U.S. domestic equity markets have largely recovered from the 2008 Great Recession. It may have taken four years but it still seems a remarkable achievement given the Dow’s low of 6620 in March 2009. It is worth noting that prior highs were attained in an era with a poor savings rate and wide use of levered strategies. The last four years were widely characterized by a “low return” market mantra and fear of equities stoked by many doomsayers, pundits, and strategists who greeted every upturn with pessimism.
2013-04-02 A Q1 Letter to Clients: Why Warren Buffett is Bullish on Stocks by Dan Richards (Article)
Since 2008, I have posted templates to serve as a starting point for advisors looking to send clients an overview of the year that just ended and the outlook for the period ahead. This quarter’s letter draws on Warren Buffett’s most recent letter to shareholders, and why he is bullish on the US equity market.
2013-03-29 Market Resilience by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab
After a stellar first quarter performance from US stock markets, which showed impressive resilience to continued headwinds, a pullback is certainly possible but we don’t suggest investors who need to add to allocations wait. In a relative world, the US stock market continues to look like an attractive place to invest, although there may also be opportunities in Japan and Europe as well. The upcoming earnings season could tell the story for the market over the next couple of months, but we continue to advocate a long-term point of view and maintaining a diversified portfolio.
2013-03-28 Whatever It Takes in Japan? It Takes an 'Audacious' Monetary Policy! by Richard Clarida and Tomoya Masanao of PIMCO
The BOJ will have to make some key monetary policy decisions soon, given Kuroda’s sincere but ambitious desire to achieve 2% inflation within two years. The BOJ has lagged far behind other major central banks in the deployment of its balance sheet since the onset of the financial crisis. Expect Japan’s monetary policy to be more aggressive and experimental as it shifts toward reflating the economy. For global investors, this may mean a modest economic growth contribution from Japan, at least over a cyclical horizon, as well as additional central bank liquidity pouring into global m
2013-03-21 Cyprus as a Pandora’s Box by Scott Minerd of Guggenheim Partners
The attempt to levy a deposit tax on Cypriot accounts has the potential to further destabilize the European Union, with contagion risk elevating for other peripheral member states.
2013-03-21 Global Markets’ Time Factor by Mohamed El-Erian of Project Syndicate
In recent months, the dichotomy between booming financial markets and sluggish economies (and dysfunctional politics) has loomed large. The critical element of time and who controls it could well mean the difference between an orderly global resolution of today’s ongoing financial problems and a return to serious trouble.
2013-03-18 Finding the Sweet Spot by Mark Kiesel of PIMCO
Where is the investment “sweet spot” in today’s global financial markets? The uneven global growth outlook means there are opportunities and risks for both credit and equity investors.
2013-03-07 US Manufacturing Restores Competitive Vigor by Joseph Carson of AllianceBernstein
The US manufacturing sector has repeatedly figured out how to reinvent itself when faced with competitive threats. In recent years, American companies have become much leaner, regaining an edge in global markets that should lead to a bigger role in economic growth.
2013-03-05 Currencies: The Winds of War by Milton Ezrati of Lord Abbett
In this conflict, the collateral damage could include asset bubbles and accelerating inflation.
2013-02-22 Central Banks Are Factoring Financial Stability into Their Decision Making by Team of Northern Trust
Central banks are factoring financial stability into their decision making. The FOMC is taking a critical look at its asset purchase strategy. Don't look now, but the sequester is coming.
2013-02-01 Q412 Portfolio Commentary by Jay Compson of Absolute Investment Advisers
While much of the fundamental picture has played out as we expected over the past 18-24 months, the financial markets appear to be concerned solely with the existence or non-existence of macro headlines and events. There seems to be a disconnect between market movements and fundamentals which means doing real work based on intellectual honesty and logic puts you at a disadvantage. Chasing momentum and profiting from central bank market manipulation appear to be the current winning strategies.
2013-02-01 2 Major Threats Facing the US Economy by Russ Koesterich of iShares Blog
While markets cheered the House of Representatives' recent vote to temporarily suspend the debt ceiling, the US economy isn't out of the woods yet. Russ highlights the two major risks it still faces.
2013-01-30 Expanding Horizons: The Most Difficult Environment for Generating Income in 140 Years by Ehren Stanhope, Travis Fairchild of O'Shaughnessy Asset Management
In the most difficult environment for generating income in 140 years, we survey the landscape of income-generating options, review lessons from the previous bond Bear Market, and demonstrate why we believe global, dividend-paying equities deserve a prominent role in investor portfolios.
2013-01-24 Emerging Asia Pacific: Regional Economic Review 4Q 2012 by Team of Thomas White International
Emerging Asia Pacific economies showed strong signals of a rebound in economic activity amidst generally rising exports and stabilizing inflation. While some major economies like China, which had cut interest rates throughout 2012 to stimulate the economy, saw a mild resurgence in inflation, many countries like South Korea, Taiwan, Malaysia and Philippines saw inflation stabilize significantly during the quarter. Still, India, the region's second largest economy, continued to be troubled by rising prices despite high interest rates.
2013-01-17 Signs of a Rotation by Scott Minerd of Guggenheim Partners
As yields continue to dwindle and risks in the fixed income market come into clearer focus, investors have begun to regard equities as a compelling alternative to bonds.
2013-01-15 Template for a Year-End Client Letter 2012 in Review: Learning from the Past, Looking to the Future by Dan Richards (Article)
Client concerns about whether you're on top of things can be reduced by sending regular overviews of what's happened in the immediate past and the outlook for the period ahead. That's why each year since 2008, I have posted templates to serve as a starting point for advisors looking to send clients an overview of the year that just ended and the outlook for the period ahead.
2013-01-10 Market Perspectives Q4 2012: Politics vs. Economics by Richard Michaud of New Frontier Advisors
The major news of the quarter was that a fiscal cliff deal passed in the final hours of the 112th Congress and was signed by President Obama. The deal averts tax increases on most Americans and prevents large indiscriminate cuts in spending in many government programs. It also averted, by nearly universal consensus among macroeconomists, tipping the American economy into recession with attendant global implications.
2013-01-07 Fiscal Cliff: No Grand Bargain, But Enough for Now by Joanna Shatney of Schroders Investment Management
Although the best case scenario is off the table, US markets are breathing a sigh of relief that the tax cliff has been averted at least for a few more months. The final package holds enough for both the bears given that we will have to revisit the fiscal worries in the next few months and for the bulls who believe that the near-term risks have been pushed aside.
2013-01-07 4 Years Into a Bull Market, Now What? by Team of Managers Investment Group
Investors have been bombarded with gloomy news about risk and uncertainty in the global markets. This pessimism, along with spikes of volatility and multiple significant drawdowns over the last several years, has caused many to flee equities for the relative safety of bonds and cash. Amidst this uncertain backdrop, however, U.S. equity markets have quietly made nice gains over the last few years. Since the market hit bottom in March 2009, the S&P 500 is up cumulative 125% including dividends.
2013-01-06 Partial Deal: Perspectives on the U.S. Fiscal Policy Agreement by Team of Janus Capital Group
The U.S. Congress and President Barack Obama have patched together a deal that avoided the January 1 fiscal cliff. However, Washington has postponed a full resolution of fiscal and tax issues, creating continued uncertainty that can be expected to weigh on business and consumer spending and potentially keep U.S. gross domestic product growth below 2% in 2013.
2013-01-04 In 2013, Resolve to Follow the Money by Frank Holmes of U.S. Global Investors
During these first days of January, many adopt an out with the old, in with the new, approach to shed bad habits or extra pounds. Washington opted for its same ol strategy when averting the fiscal cliff, as the addictive nature of can-kicking is a transatlantic sport, according to The Economist. The short-term fix did nothing to control the unsustainable path of entitlement spending on pensions and health care nothing to rationalize Americas hideously complex and distorted tax code... and virtually nothing to close Americas big structural budget deficit.
2012-12-27 The Ten Best Articles You Probably Missed by Robert Huebscher (Article)
Great articles don't always get the readership they deserve. We've posted the 10 most-widely read articles for the past year. Below are another 10 that you might have missed, but I believe merit reading.
2012-12-21 Republican Sellout Invites Stagflation by John Browne of Euro Pacific Capital
While it may not be a surprise that the Republicans are preparing to yield on their vow to oppose tax hikes, it should raise investor concerns the world over that an upcoming budget agreement will likely involve a Congressional surrender of its authority to set the federal debt ceiling. In exchange for this, it appears that the Republicans have simply done nothing to halt, or even curb, the dangerous federal spending trajectories or the current drift towards greater state control of the economy.
2012-12-21 "Frack and Slack" Put U.S. Trade in the Black? by Milton Ezrati of Lord Abbett
Could it be that the U.S. trade balance is headed into the black? At first blush, the prospect looks dubious. This country's trade deficit has drifted deeper into the red for so many decades now that few can even conceive of lasting improvement. Even so, that is what seems to be in prospect.
2012-12-14 2013: A Year in Global Equities by Virginie Maisonneuve of Schroders Investment Management
Global equities are very attractively valued and we are positive for their prospects in 2013 as the global economy normalises. Progress in Europe, the end of China's growth slowdown and continued momentum in the US economic recovery will support global equities. Longer-term investors must position themselves for a growth-saturated world in which sustainability and innovation will be even more important.
2012-12-06 Ditching Before the Fiscal Clif by Peter Schiff of Euro Pacific Capital
Turn on the TV and this is what you'll hear: The US budget is heading for a fiscal cliff. If a deal isn't reaching in Congress by the end of this year, a combination of automatic tax hikes and budget cuts will sink America into economic depression. There is no escape. Of course, my readers know that the fiscal cliff is merely an example of the piper having to be paid. The problem isn't the bill, but that we ran it up so high in the first place.
2012-11-20 Fix the Debt! by Team of Franklin Templeton Investments
In the "normal" course of a U.S. election, investors typically breathe a sigh of relief when the results come in, with at least one layer of market uncertainty removed. This time around, the political squabbling hasn't ended with the close of the polls on November 6. The debate about the "fiscal cliff," a combination of spending cuts and tax hikes set to go into effect on January 1, 2013, has heightened. Market volatility since the election seems to have heightened, too.
2012-11-12 Weekly Market Commentary by Scotty George of du Pasquier Asset Management
And so, we move on. Not simply the collective "we" of the markets, nor the political parties, nor any special agenda groupings, but, really, the global tapestry which can now divert its attention from American politics and focus once again on capitalism, peace-making and common ground solutions.
2012-11-06 Asset Location: Nine Tips to Create “Tax Alpha” by Glenn Frank (Article)
With campaign season finally over, taxes are going to dominate the debate in Washington in the months ahead – however things shake out at the polls today. It's going to be confusing; it's going to be uncertain. But many of the most critical questions advisors will ask can be answered with an analytical approach to deciding where to 'house' assets – in taxable or tax-sheltered accounts.
2012-11-01 Growth Outlook for Europe, China and the US by Mark Nash of Invesco
Growth Outlook for Europe, China and the US Mark Nash, Senior Portfolio Manager in Invesco Fixed Income, outlines the case for global "core" government bonds amid central bank actions on growth prospects in Europe, China and the US.
2012-10-19 ECB Needs to Rescue German and French Banks More than European Periphery: Global Macro View by George Bijak of GB Capital
Whenever we talk about rescuing overleveraged Europe it is always about Spain, Italy, Portugal, Ireland, and Greece the European periphery loaded with debt that they cannot possibly repay. But a closer look at the recent IMF data reveals that German and French banks need rescue more than anybody
2012-10-10 Third Quarter Surge Caps 12-Month Relentless Risk Rally by Douglas Cote of ING Investment Management
Despite the rally of the past year, equity markets still look cheap. Weakening manufacturing data suggest the 12-quarter streak of positive earnings growth may come to an end in the third quarter.
Housing has turned the corner, providing consumers with cause for confidence. Though fundamentals have wavered a bit, we are constructively bullish on risky assets, as "successful investing demands a choice between prudent risk control and outright risk avoidance".
2012-10-09 A Q3 Letter to Clients - Insights from a Wall Street Legend by Dan Richards (Article)
Here is a template for a letter to serve as a starting point for advisors looking to send clients an overview of the past 90 days and the outlook for the period ahead. In it, I draw upon investing principles articulated by the legendary Barton Biggs, who passed away earlier this year.
2012-10-05 Election Preview by Investment Strategy Group of Neuberger Berman
Our Investment Strategy Group sizes up the approaching U.S. election and its potential impact on the "fiscal cliff."
2012-10-05 When Do You Ignore Your Gut? by Team of Franklin Templeton Investments
Anyone who took an introductory psychology class probably remembers the classic study in which different people witnessing the same crime each report a different take on what happened. Though each presumably sane, sober person witnessed the events with his or her own two eyes, individual expectations and biases influenced how they perceived what happened. Sure, you say, but what does this have to do with investing? Well, it turns out that our individual expectations and biases influence how we view investments, too.
2012-10-03 Where are the Global Winners? by Louie Nguyen of Soledad Investment Management
In today's ber-dreary and volatile global market condition, it can be difficult to imagine how the various markets around the world will eventually right themselves. It is worth noting, however, that the global market has righted itself before, from predicaments that seem just as, if not even more, dire than what we face today. Think Thailand and Korea in 1997, Mexico in 1994 and the Dot-Com Bubble in 2000. The following is the latest in our annual Global Price to Earning (P/E) analysis. It is part of our on-going effort to find compelling investments from around the world.
2012-10-03 A Funny Thing Happened On The Way To Economic Armageddon by Scott Colyer of Advisors Asset Management
After the recent announcement by the U.S. Federal Reserve (Fed) that they would begin to engage in what has been deemed "QE3," there has been a lot of skepticism that such a plan could actually work. The Fed is attempting to carry out their dual mandate of price stability and full employment by engaging in a new round of asset purchasing targeted at the mortgage market.
2012-09-27 Dividend Yield vs. Dividend Growth by Ashvin Viswanathan of O'Shaughnessy Asset Management
Investor demand for high-yielding companies has grown even stronger because of the perception that these companies are more defensive and recent news that the Federal Open Market Committee (FOMC) has extended its forecast of low rates until 2015. We believe buying a portfolio of high-quality, global, market-leading companies with superior valuations and high dividend yields provides investors with an excellent opportunity to consistently beat the market, while providing high income relative to fixed income securities in the current environment.
2012-09-07 The Federal Reserves Next Move: QE3? Perspectives on U.S. monetary policy by Team of Janus Capital Group
We believe the Fed will take additional action by mid-September to stimulate the economy, probably through a third round of quantitative easing. U.S. economic growth remains well below potential and is slowing, and the Fed is not meeting its dual mandate to ensure price stability and full employment. We recently reduced our 2012 GDP growth estimate to between 1.5% and 1.7%.
2012-09-07 The Fed's Campaign by Peter Schiff of Euro Pacific Precious Metals
This past Friday, as Fed Chairman Ben Bernanke delivered his annual address from Jackson Hole - the State of the Dollar, if you will - I couldn't help but hear it as an incumbent's campaign speech. While Wall Street was hoping for some concrete announcement, what we got was a mushy appraisal of the Fed's handling of the financial crisis so far and a suggestion that more 'help' is on the way.
2012-08-31 While Everyone Worried About Europe by Robert Horrocks of Matthews Asia
We all do it. We all refer to Asia as an export-driven economy. It's one of those seemingly useful bits of shorthand. Unfortunately, I believe it has come to do more harm than good. Along with "emerging economies," I would like to banish the phrase to the ranks of outlawed jargon.
2012-08-24 Preferred Securities: Review and Outlook by William Scapell, Elaine Zaharis-Nikas of Cohen & Steers
We would like to share with you our review and outlook for the preferred securities market as of July 31, 2012. For the month, the BofA Merrill Lynch Fixed Rate Preferred Index had a total return of 1.7% and the BofA Merrill Lynch Capital Securities Index returned 2.9%. Year to date, the indexes had total returns of 11.1% and 12.7%, respectively.
2012-08-23 Reading the Right Tea Leaves to Gauge Market Volatility by Daniel Morillo of iShares Blog
Market volatility has come to be associated with short-term events, like the Lehman Brothers bankruptcy or the downgrade of US debt. But Daniel Morillo explains why investors should keep an eye on broad macroeconomic prospects and not the latest breaking news headline to gauge where market volatility is headed for the longer term.
2012-08-17 Evaluating the Wisdom of Buying Gold by Frank Holmes of U.S. Global Investors
At the end of January 2008, I posted a discussion about how the book The Wisdom of Crowds by James Surowiecki could explain gold's price climb. The book's premise was basically that "large groups of people are smarter than an elite few."
Even before the height of the global crisis, there was a "wise crowd" of investors who had been buying gold as a safe haven from currency risks and the trillions of dollars invested in derivatives, and as a way to recycle petrodollars.
2012-08-08 Emerging Markets Equity Monthly Product Commentary: July 2012 by Team of Thomas White International
Emerging market equities made modest gains during the month of July, as global markets sustained the optimism from the last week of the previous month. Select markets in Asia, such as Indonesia, Korea, and Malaysia, as well as Turkey and South Africa outperformed during the month. Repeated assurances by European policymakers over further policy action helped assuage market concerns about the region's fiscal crisis worsening, though economic data continues to be relatively weak.
2012-07-30 Weekly Market Commentary by Scotty George of du Pasquier Asset Management
Our collective mood is souring, particularly in light of falling wages, increased competition for jobs, portfolio (net worth) depreciation, and daily news about politics, terrorism, and business corruption. Wheres the good news?
2012-07-30 The Euro's Survival Requires German Engineering by Milton Ezrati of Lord Abbett
As Europe's paymaster, Berlin faces a tricky task: promoting austerity among economically stressed peripheral nations but not too much. In Europe's seemingly endless debt negotiations, Berlin would seem to hold all the cards. It is, after all, Europe's largest economy, its most powerful, and its most financially sound. But in reality, Berlins options are highly constrained and require a remarkably delicate policy balance.
2012-07-30 The Central Bank by John Petrides of Advisors Capital Management
Global markets responded favorably last week to comments from Mario Draghi, President of the European Central Bank, saying that he would do whatever it takes to save the euro (this reminded me of Fed Chairman Bernanke's comments in February 2009, when the Fed started its asset purchase program, and markets responded favorably soon after). Although the world awaits more details as to what Mr. Draghi's comments entail, equity markets rallied, and the yields on Spanish and Italian bonds came in.
2012-07-27 Treading Water by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab
Stocks seem to be biding time until the action heats back up as summer winds down, but market-moving events can happen at any time. The US economy continues to slow and Bernanke had a relatively dour outlook before Congress. But it appears things would have to get worse before another round of easing is initiated; the effectiveness of which we continue to question. Yields in Spain and Italy indicate action may be needed sooner rather than later, but we did get positive remarks by the ECB, which led to market rallies and a big drop in yields, providing a measure of hope.
2012-07-20 July 2012 Newsletter by Harold Evensky of Evensky & Katz
FRANK SINATRA FAN?
Mena chided me for starting my last NewsLetter on a negative note so I thought Id repent this time and start with something more positive. Even if youre not a Sinatra fan, this lovely and moving piece of music by Andre Rieu," a renowned Dutch violinist, conductor and composer, and his orchestra is a tribute to Frank Sinatra with My Way on his Stradivarius violin at Radio City Music Hall New York.
2012-07-18 Emerging Markets Equity: Monthly Product Commentary by Team of Thomas White International
Emerging market equities saw a moderate recovery during the month of June, as reduced fears about the European fiscal crisis led to a rebound in global markets. The latest agreement by European policymakers is expected to address some of the short-term challenges faced by countries such as Spain and Italy, as well as the troubled banks in the region.
2012-07-16 We Are All Alone by John Nyaradi of Wall Street Sector Selector
Global markets seem to be pricing in a new round of quantitative easing from the Federal Reserve. Dr. Bernanke and his colleagues will likely comply sometime between now and December. However, even with more quantitative easing, investors cant count on the Federal Reserve to rescue the stock market and their portfolios. We are on our own, and here's why.
2012-07-12 The View From the Fiscal Cliff by Chris Molumphy of Franklin Templeton Investments
Six months into 2012, investors whose New Years resolutions included a vow to hold strong through market dismay may be finding that the eurozone crisis and slowing global growth are testing their resolve. As we move into the second half of the year, sluggish growth and continued market uncertainty seem likely to be ongoing scenarios for the U.S., as the nation faces a fall presidential election and teeters on the edge of a precarious-sounding fiscal cliff.
2012-07-10 A Mid-Year Client Letter: Wisdom from Three Wall Street Veterans by Dan Richards (Article)
Here is a template for a letter to serve as a starting point for advisors looking to send clients an overview of the past 90 days and the outlook for the period ahead.
2012-07-06 Market Perspectives Q2 2012: A Long Road Ahead by Richard Michaud of New Frontier Advisors
The most important economic news in the quarter occurred in the last two business days. Investors were losing patience with seemingly endless and ineffectual eurozone summitry. But the resolutions by the four major eurozone members at the end of the quarter were different. The agreements allow recapitalization of Spanish banks and purchase of Italian sovereign bonds. The proposals appear to effectively address short- and long-term problems in the eurozone economies.
2012-07-05 Reconnaissance: Strategy Notes by Douglas Clark Johnson of Codexa Capital
Investors focused on emerging markets may be well positioned to benefit from a "barbell" strategy, favoring sukuk and Southeast Asian equities. While in Afghanistan, were more inclined to tilt toward optimism than despair in the wake of military right-sizing. Both India and some Middle East countries are set to be active there. We offer other comments on high dividend yields in GCC stock markets and emerging trends in Ghanas timber industry.
2012-07-02 U.S. Economic Outlook: Potential for Growth, Vulnerability to Policy Mistakes by Saumil Parikh of PIMCO
There are very early signs of improvement in the housing market. Another plus is the shift in U.S. energy supply from imported oil to domestic oil and natural gas. The U.S. economy still faces significant headwinds from over-indebtedness, large imbalances, growing inequality and policy incrementalism. In our view, investors need to consider the implications of rising forward tax rates and that price inflation will play a greater role in generating nominal GDP growth than in the past.
2012-07-02 This film is rated "R" by Scotty George of du Pasquier Asset Management
This is not your fathers stock market. Nor really is it yours, the one you envisioned two decades ago. Instead we may have leveraged, in a literal sense, all the financial details to our heirs. The bad news is that we have become marginalized. Our goals and expectations have been sequestered, postponed, for another time.
2012-06-26 A Top Analyst: North America Heading to Energy Independence by Robert Huebscher (Article)
Ed Morse, a managing director of Citigroup Global Markets, said last week that by the end of this decade the US and Canada will have a surplus of oil, leaving it with 'no room for imports.' But the longer-term picture is far less certain, as extraction moves from conventional wells to newer sources, such as deepwater fields and shale-based oil.
2012-06-22 Abandon the Panic, Not the Eurozone by Mark Mobius of Franklin Templeton
I truly believe it pays to be an optimist in life. As a long-term investor, its practically part of the job description. You can fearfully view a crisis as a time of loss and peril, or you can choose to view it as a time of opportunity with potential for positive change. The Eurozone crisis has triggered a ripple effect across global markets, and many investors are expressing pessimism about the economic health and sustainability of the region. Me? Im an optimist.
2012-06-14 The Pitfalls of Protectionism by Mark Mobius of Franklin Templeton
Free, fair and open trade is essential to fostering a thriving global economy. In the past, when economic conditions have deteriorated, weve seen governments in developed and emerging economies alike engage in protectionist policies. With growth in many countries slowing this year (tied in part to the crisis in the Eurozone), Im concerned that protectionism could be on rise. In the end, I believe these policies dont really protect anyone.
2012-06-05 Perennial May Euro Crisis Hits U.S. and Global Markets by Douglas Cote of ING Investment Management
For the third straight year, a Euro-crisis hit markets in May. Investors are fearful and looking for a plan of action. A good plan should defend against bear markets but not overreact to normal volatility. Earnings growth remains positive the U.S. is slowly but surely moving forward. Ample rewards await those who stay focused on long-term goals. For the third straight year a euro crisis hit markets in the month of May.
2012-06-04 Job Drought, Greece Wipe Out 2012 Gains by Kristina Hooper of Allianz Global Investors
The U.S. employment report dominated headlines and put investors on watch for further threats to the recovery. In Europe, Ireland's adoption of the fiscal pact was not enough to counter worries about the escalating banking problems in Spain. But as long as the U.S. savings rate, which currently stands at 3.4%, continues to decline, the downside risk to U.S. economic growth is limited. In addition, the substantial drop in the price of oil should also help boost the economy. We maintain the view that the United States will achieve 2% economic growth this year.
2012-05-26 Meanwhile, Back at the Ranch by John Mauldin of Millennium Wave Advisors
We need to tear our gaze away from Europe and look around at what is happening in the rest of the world. There is about to be an eerily near-simultaneous ending to the quantitative easing by the four major central banks while global growth is slowing down. And so, while the future of Europe is up for grabs, the true danger to global markets and growth may be elsewhere.
2012-05-14 The Bull Market Has Not Yet Reached Its Highs by Bob Doll of BlackRock Investment Management
It has been the case for some time, but recent events serve as a reminder that the primary risk to the global economy and markets is the ongoing debt crisis in Europe. Confidence over policymakers' ability to deal with the crisis took a hit recently given that the election results in Greece and France signal a shift away from governments' willingness to move forward with unpopular austerity measures. The resulting political uncertainty and investor confusion has put downward pressure on stocks and other risk assets. Unfortunately, the reality is there is no quick fix for Europe's problems.
2012-05-05 Late Bull Stampede Turns Bears Into April Fools by Douglas Cote of ING Investment Management
April should have derailed the market, but it didnt; a temporary pullback was the best the bears could muster. The bears normally make money by betting against the crowded trade; by being on the sidelines, the bears now are the crowded trade and in foolish fashion. The bulls, meanwhile, find themselves in the odd position of being seen as contrarians, even though fundamentals are setting records and equity market performance over the last two quarters has been spectacular. Let the stampede continue!
2012-05-02 Chinas Landing Pattern by Mark Mobius of Franklin Templeton
Our main investment themes in general have been focused on consumers and commodities. It is our belief that Chinese consumers are likely to continue gaining clout, and Chinese macroeconomic policy has increasingly been moving from an export-based model to one fueled by domestic demand. We also expect that demand for hard and soft commodities should remain strong as China and many other emerging markets industrialize, gain wealth and increase spending on infrastructure, which tends to tilt the balance between supply and demand in favor of producers.
2012-05-02 Its Good To Be The King by Chris Richey of Neosho Capital
The sovereign Greek debt default will ultimately lead to a sovereign Spanish debt default, and thus we tell you why sovereign debt should not be viewed as risk-free.
2012-05-01 Another Story of Too Much Debt: Investing During Unsustainable Economic Conditions by Brian McAuley (Article)
US-based investors cannot ignore the macro environment, and therefore must consider the consequences of our increasing indebtedness and its impact on capital markets. We can gain valuable insights into our fiscal problems from the housing bubble and the European sovereign debt crisis - lessons which every value investor should heed.
2012-04-23 Emerging Asia Pacific: Economic Review 1st Quarter 2012 by Team of Thomas White International
Emerging Asia Pacific economies, which reported dismal economic numbers during the fourth quarter of 2011, recovered some lost ground during the first quarter of 2012. Export-led growth in many Asian countries, which had come under pressure during the last months of 2011, witnessed slight improvements in 2012 thanks to receding fears about a sovereign debt crisis in the EU and a stronger-than-expected recovery in the U.S. China, the regions largest economy, however, signaled that it will accept a slightly lower growth rate of around 7.5 percent over the coming years.
2012-04-16 What the Return of Market Volatility Tells Us by Mohamed A. El-Erian of PIMCO
Signals of a challenging outlook are much louder in European bond markets. Last week, yields on peripheral government securities went from flashing orange to again flashing red, with Spanish risk spreads near or at record levels. All this speaks to the unsettling situation of markets that remain highly dependent on policymakers who, themselves, are stuck in the muddled middle: unable to deliver sustainable outcomes or to exit from their market interventions. This is the unfortunate reality of an "unusually uncertain" outlook, blunt policy tools, and a rather dysfunctional political context.
2012-04-12 Equity Market Review & Outlook by Richard Skaggs of Loomis Sayles
Looking out to year-end, Congress and the White House will be required to act on a long list of expiring tax measures and a debt ceiling increase is necessary as well. As we saw in 2011, compromise is very difficult to achieve and the elections introduce another level of uncertainty. However, the markets current attractive valuation builds in some of these risks. Beyond our shores, there is always the possibility of disappointment in Chinas growth trajectory, and further serious challenges with weaker members of the euro zone should be anticipated.
2012-04-10 China Experiencing Growing Pains by Chris Maxey and Ryan Davis of Fortigent
For most of the past two years, investors have been pre-occupied with the fiscal catastrophe in Europe and with good reason. However, the relative health of the worlds second largest economy arguably deserves more headline space. A year ago, Chinas stock market led the broader emerging markets down due to pervasive inflation concerns. Official figures reached as high as 6.5%, and some reports of pork and other food price inflation reached double-digit levels. Chinese authorities were forced to slow down the pace of their economy by raising bank reserve ratios and key lending rates.
2012-04-05 Global Equities: Building a Research Mosaic for the Information Age by John Longhurst of PIMCO
As a result of increasing correlations across the globe, identifying the best global franchise opportunities at attractive valuations is becoming increasingly important. We believe that taking a broader global perspective and comparing a companys valuation and growth outlook versus their global competitors is just as germane as looking at them relative to their country or region. Identifying Chinese and non-Chinese companies that will gain and lose in this process is a critical long-term challenge when constructing a global portfolio and not an easy one.
2012-03-30 Singapore Gateway to Southeast Asia by Mark Mobius of Franklin Templeton
Viewing the region from the now 20-year old seat of our Singapore office, what we see in Southeast Asia is a generally favorable combination of rising per-capita incomes and a relatively young population, a recipe with the potential to fuel the appetite for a wide variety of consumer goods. The challenges Southeast Asian markets face must not be easily dismissed, but overall I am optimistic about the regions long-term growth potential.
2012-03-28 The End of the 30-year Bond Bull Market? by Team of Knowledge @ Wharton
Is the great 30-year bull market in bonds coming to an end? Yes, perhaps -- or maybe not: It depends on whom you ask and how flexible your timing is. While many people think of bonds as conservative holdings, they have produced stellar returns for decades, thanks to the taming of inflation and other factors. But some experts say economic recovery could now reverse the process by driving interest rates higher, causing bond prices to fall.
2012-03-21 Falling Treasuries: A Currency Perspective by Axel Merk of Merk Funds
What are the implications for the U.S. dollar and investors portfolios if bond prices continue to fall, as they have of late? Within that context, should investors care whether the U.S. retains its status as a reserve currency? Should it effect the way investors think about their own cash reserves?
2012-03-19 Andrew Balls Discusses PIMCO's European Cyclical Outlook by Andrew Balls of PIMCO
The ECBs intervention has helped the European system undergo a slower and more orderly deleveraging process but it does not deal with the twin underlying problems of too little growth and too much debt in the countries at the center of the crisis. The eurozone faces a daunting set of challenges, including technical and economic challenges but highest on the list are politics and coordination. Greeces potential exit from the eurozone remains a significant risk and one that could lead to contagion across the eurozone as investors reassess the potential currency risk.
2012-03-14 Par for the Investing Course by Team of Franklin Templeton
Theres a certain Hollywood mystique around the quest for The Next Great Investment. The un-glamorous truth, of course, is that unearthing hidden opportunities actually takes equal parts elbow grease and know-how. Par Rostom, is that roll-up-the-sleeves kind of guy. Hes not looking to invest in companies just because they are household names with splashy advertising campaigns. The companies are the ones he feels are best in their particular niche, but that youve probably never heard of. Surprisingly, hes finding some of them in the eurozone, a place the crowd is largely avoiding today.
2012-03-05 Investors Are Skeptical, and Pace of Gains Slows by Bob Doll of BlackRock Investment Management
Even with the S&P setting new post-crisis highs, we don't think stocks are ahead of themselves. While we may not be pricing in a recession like we did last October, markets are in the same place as last April but earnings are up nearly 15%. The October market bottom also seemed to have technical characteristics of an important low. While there remain plenty of problems, including rising oil prices and profit margins at very high levels, we recommend overweighting equities. For investors that are underweight equities, we recommend continuing to dollar-cost-average to increase exposure.
2012-02-25 The Emotions of Fear and Apathy Create Good Buying Opportunities by Frank Holmes of U.S. Global Investors
One of the reasons money has found its way back to the market is that low interest rates and a bubble in bonds have upped the attractiveness of equities relative to other asset classes. In fact, many large-cap equities come with a higher yield. This means that investors can wait for the growth, while receiving the income. Overall, it looks like the markets dark clouds are lifting and we could be in for a period of sunny skies in the months ahead.
2012-02-25 Is Decoupling for Real? by Team of Neuberger Berman
After an extended period of high correlations, U.S. and European stock markets have taken distinctive paths in recent months. In this report, we take a look at the link between underlying economic fundamentals and market results to consider whether these markets have truly decoupled or are simply going through a temporary separation.
2012-02-24 Large Cap Value Strategy - January 2012 Review & Outlook by Team of Cohen & Steers
January was a quiet but strong month for equities. Investors moved away from defensive sectors and into somewhat riskier names as sentiment about the global economic outlook improved. There was no bad news from Europe. Indeed, global markets expressed relief that Europes banks now have access to additional liquidity through the Long-Term Refinancing Operations program (LTRO) announced in December. The U.S. economy continued to show self-sustaining growth that, while modest, allayed fears of recession.
2012-02-10 Missed Opportunities? by Liz Ann Sonders, Brad Sorensen and Michelle Gibley of Charles Schwab
Investors eased back into stocks to start the year. This is the start of a sustainable trend, but equities rarely go up in a straight line and near-term caution may be warranted. Another deadline is approaching for Congress and the President to make a deal. Something will get done, but any hopes for substantial action remain dim. Markets appear to be more comfortable with the European debt crisis and the risks associated with it. Central banks around the world are easing, which could help support international stocks in the coming months.
2012-02-03 Global Markets Rally on Moderating Global Risk and Positive Fundamentals by Doug Cote of ING Investment Management
The so-called January Effect typically causes equity markets to explode out of the gates only to fizzle out after the second week of the month. January 2012 was different, however, as the equity market delivered four weeks of moderate but relentlessly positive returns on the back of easing global risks. Meanwhile, volatility broke below 20 for the first time since last May. Investors on the sidelines barely noticed the explosive performance, nor did a media that nonchalantly labeled it a stealth rally There is nothing stealthy about a 4.5% monthly return!
2012-01-31 Barry Eichengreen on the End of the Dollar by Dan Richards (Article)
Barry Eichengreen is a professor of economics and political science at the University of California, Berkeley and a former senior advisor to the International Monetary Fund. In this interview, he discusses the future of the dollar as the reserve currency and the role of the IMF in the Eurozone crisis. This is the transcript of the interview.
2012-01-26 2011 A Difficult Year for Active Investors by Owen Murray of Horizon Advisors
Actively managed mutual funds greatly underperformed their respective benchmarks in 2011. This was primarily due to extreme market conditions triggered by the European debt crisis. Investment managers were not rewarded for good fundamental decision making as fear dominated trading activity in the global markets. Active manager underperformance / outperformance trends tend to be cyclical, but over time, good active managers add value. We expect actively managed funds to outperform once market volatility subsides and fundamental factors reemerge as a key consideration for investors.
2012-01-25 Significant Growth Potential for Indonesia's Middle Class by Frank Holmes of U.S. Global Investors
Indonesias workforce is growing 7,000 people stronger each day, adding an estimated 21 million people to its workforce by over the next decade. This is second only to India. This growth has given birth to a burgeoning middle class willing to spend money on durable goods such as clothing, personal-care items, home appliances and electronics. Currently, domestic consumption accounts for two-thirds of Indonesias GDP. Weve already seen double-digit growth in sales for televisions, cars, computers and laptops over the past few years. More importantly, this trend is just getting started.
2012-01-20 U.S. Domestic Stocks Time for a Close-Up by Philip Tasho of TAMRO Capital
For 2012 we believe U.S. stocks should provide investors good to average returns for the year. Large cap stocks should have an edge over small and midcap stocks due to superior valuation and improving fundamentals. The domestic economy will likely register continued subpar economic growth and global markets should also remain subdued due to credit issues in Europe and softness in export markets. As this is an election year, we believe there will continue to be volatility in the U.S. market. We hope to take advantage of near-term downward volatility.
2012-01-20 Emerging Consumers Drive Gold Prices: Who Knew? by Amit Bhartia and Matt Seto of GMO
Conventional wisdom has it wrong. The prevailing view is that the rapid rise of gold prices over the past 10 years has been caused by monetary authorities in the developed world debasing their currencies. By this logic, investors in the developed world have hedged debasement risk by pouring money into gold, both in the form of direct purchases and via ETFs. We believe that gold is an emerging markets asset as much as it is a bet against the Fed and that much of the rise in gold prices has been driven by purchases by emerging consumers, who are driven primarily by financial repression.
2012-01-09 Macro Matters: Incorporating Top-Down Views in Emerging Market Equities by Curtis Mewbourne and Masha Gordon of PIMCO
From 2003 to 2011, over 50% of returns of the MSCI Emerging Markets Index came from country-related and currency-related factors.
Over the next 12 months, there will be elections in countries representing just under half of global GDP. Therefore, we expect more policy experimentation, varying degrees of effectiveness, and unintended consequences.
Currencies are also an important driver of EM equity returns, and the cost of hedging currencies has meaningfully declined over time.
2012-01-05 Europea Source of so Much Pain and Distortion by Milton Ezrati of Lord Abbett
The panic from the risk of default and the possible dismantling of the euro has gained the headlines and depressed most asset prices across the globe. The austerity measures, seemingly demanded by the situation and certainly by the EU and the ECB, have clearly set Europe on a recessionary path that threatens the pace of global growth. Europes problems have also distorted currency values across the world, creating problems in yet another way. These will linger even though the ECB seems to have overcome its former objections and has begun to provide the liquidity needed to quell market fears.
2012-01-03 New Measures of Risk (and why markets are now very fragile) by Adam Jared Apt (Article)
Understanding risk is essential to successful investment management, yet most common measures, like beta, capture only risk within markets - disregarding systemic risk of the markets themselves. Fortunately, new research is now shining light on "fragility" or systemic risk - how fast and how severely an unanticipated event will propagate through the markets.
2011-12-29 What Can We Expect in 2012? by Frank Holmes of U.S. Global Investors
As we prepare to bid farewell to 2011 and welcome 2012, its undoubtedly important for investors to start the new year off with as much knowledge about the markets as possible. I saw a great visual over the holiday weekend that captured the effects of the financial crisis. The sky-high leverage ratios of Morgan Stanley, Bear Stearns, Lehman Brothers and Goldman Sachs caused part of the economic weakness, but Nomura points to the policy mistake which forced Lehman Brothers to declare bankruptcy as the reason GDP plunged so significantly.
2011-12-23 European Investment Commentary by Team of Cohen & Steers
Our global macro view has turned more positive given the recent shift toward monetary easing in Asia Pacific and emerging markets, as well as U.S. economic data confirming slow but positive growth. However, we expect Europe to struggle in the intermediate term as austerity measures introduced by a variety of governments continue to hinder growth.
2011-12-23 International Real Estate Investment Commentary by Team of Cohen & Steers
Our macro outlook has turned more positive given the recent shift toward monetary easing in Asia Pacific and emerging markets, as well as U.S. economic data confirming slow but positive growth. However, Europe is likely to remain an overhang, as the region appears to be heading into recession, making a resolution to its debt crisis considerably more difficult.
2011-12-23 Global Infrastructure Investment Commentary by Team of Cohen & Steers
The investment environment is likely to continue to be characterized by heightened risk, including political risk as governments institute austerity measures and posture ahead of upcoming elections. The delay in the Keystone XL pipeline in the United States and Canada and the challenge faced by Central Japan Railway in confirming government financial assistance underscore these risks. Positive fundamental trends do continue, such as in the North American pipeline space, where companies continue to benefit from the need to reshape the regions energy grid.
2011-12-20 NewsLetter - December 2011 by Harold Evensky of Evensky & Katz
No question the markets have been scary and whenever that happens youll read about the value of diversification. The good news is, it works. It may not work day-to-day but over economic cycles, it works. Still, most investors do not really understand what a real diversified portfolio looks like so I did a quick and dirty evaluation of E&Ks typical investment portfolio and found: Stock positions in well over 12k different companies. The largest single position was Exxon at about 0.8% in an all equity allocation. Companies based in over 40 different countries.
2011-12-16 The Great Scarcity: Stockpicking by Bill Smead of Smead Capital Management
Correlations among the S&P 500 Index companies was the highest on October 10th of 2011 as it has been for 25 years. In the opinion of Smead Capital Management, this means that more investors are participating in market directional strategies, macro-economic strategies and tactical portfolio strategies than at any time in US history. As large-cap value managers and stock pickers, we are very excited about the next three to five years as all the chips have moved to the other side of the table and stock picking has become a scarce resource.
2011-12-13 Asset Allocation and Risk Management in a Bimodal World by Vineer Bhansali of PIMCO
Fat tails and negative skewness in the distribution curve can arise from the mere possibility of multiple equilibriaeven if both individually appear normal. Once markets arrive at a resting place among different equilibria, they tend to become trapped due to a variety of restraining forces. For all these reasons, we believe that the core building blocks of asset allocation and option pricing in the current macroeconomic environment should allow for the possibility of multimodality. This significantly changes the conceptual approach towards portfolio construction and risk management.
2011-12-12 Weekly Market Commentary by Scotty George of du Pasquier Asset Management
We yearn for improvement, yet do not wish to lower our standards of evaluation. Year-over-year uptrends are indeed showing some progress, but dont factor in the bigger issues of jobs loss, savings depletion, home and portfolio devaluation and most importantly the loss of innocence/confidence that our institutions know how to do it better and can help us to sustain enthusiasm for something better ahead.
2011-12-09 Markets Rolling Look For More Of The Same by Monty Guild and Tony Danaher of Guild Investment Management
During the last two weeks, global markets have moved their way to higher ground and indications point to a healthier finish than expected to an otherwise sickly 2011. We see several developments supporting a continued equity market rally. They have to do with measures taken in China, Europe, and by central bankers around the globe. The Canadian and Singapore dollars are well-managed currencies in countries with conservative banking systems. They are good candidates for continued long- term appreciation versus the Euro and U.S. dollar.
2011-12-09 Greenwich Hedge Fund Indices Post Modest Losses in November by Clint Binkley of Greenwich Alternative Investments
Hedge funds as measured by the Greenwich Global Hedge Fund Index posted losses in November, losing ground during the latter half of the month on weak fundamentals in European markets. The GGHFI shed 1.05% compared to global equity returns in the S&P 500 Total Return (-0.22%), MSCI World Equity (-2.69%), and FTSE 100 (-0.70%) equity indices. European headlines continue to dictate the mood of global markets and cause increased volatility in equities. Hedge fund managers have decreased leverage and exposure to mitigate market risk but are still exposed to broader moves
2011-12-08 Will a Eurozone Recession Put a Damper on the World's Fragile Economic Recovery? by Team of Knowledge @ Wharton
If large parts of Europe fall into a recession, as many experts are predicting, it is likely to have negative, although varied, effects on economies around the world, including those -- like the United States -- that are struggling to recover from the global financial crisis. As European leaders hammer out yet another package of solutions this week, Wharton faculty weigh in on the impact of a eurozone recession, as well as the pros and cons of the recovery measures that are up for debate.
2011-12-08 Significant Growth Potential for Indonesias Middle Class by Frank Holmes of U.S. Global Investors
Indonesias workforce is growing 7,000 people stronger each day. This is second only to India as Asias fastest growing workforce. CLSA says this growth has given birth to a burgeoning middle class willing to spend money on durable goods such as clothing, personal-care items, home appliances and electronics. Currently, domestic consumption accounts for two-thirds of Indonesias GDP. Weve already seen double-digit growth in sales for televisions, cars, computers and laptops over the past few years. Indonesia appears well positioned for future growth.
2011-12-06 Storm Clouds Across the Globe by Komal Sri-Kumar of TCW Asset Management
Major world equity markets had their best weekly performance in three years, boosted by economic numbers from the US, and by hopes that European leaders may find a solution to the debt crisis. U.S. manufacturing showed signs of regaining momentum, with both new orders and exports coming on strong. At weeks end, jobs numbers for November indicated that the open unemployment rate had dropped from 9.0% to 8.6%. Healthy sales on Black Friday (November 25), the traditional beginning of the holiday shopping season, also cheered investors during the following week.
2011-12-05 Weekly Market Commentary by Scotty George of du Pasquier Asset Management
Any euphoria about last weeks intermittent triple-digit rallies has to be couched in a context of longer-term developing downtrends and a desire to see any positive news as bear-busting. Alas, the ongoing downcycle persists and is likely to be the primary determinant to market performance for the foreseeable future. As junctures go, last week represented a few days of post-holiday welcome relief, but hardly the initiation of a change in secular direction. The headwinds are too daunting when analyzing market and sector relative strength quotients.
2011-12-05 Weekly Market Commentary by Scotty George of du Pasquier Asset Management
Like a train wreck, the global markets have maintained a vicious shakeout whose collapse is frightening not only for the Europeans but for America and its trading partners. For the past several months we have been building a slow crescendo which, like a great symphony, has many codas yet to play. Clearly, a correction to overborrowing, overspending, and over-expecting is in place. Turbulence and volatility, both in the markets and political discourse, is the order of the day. The foundation of trust which underpins all capital exchange and political governance is nearly in default.
2011-12-03 Schwab Market Perspective: Short-term PainLong-term Gain? by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab
Markets have been under pressure as the crisis in Europe has recently intensified, providing the impetus for more aggressive action and an eventual resolution, including this week's coordinated central bank actions. Economic data in the United States continues to be largely better than expected. The supercommittee failed to come to a deficit reduction agreement. While markets expressed initial disappointment, their failure may end up being beneficial as it forces spending restraint. As the euro crisis has deepened, some steps have been taken but mostly address liquidity, not solvency.
2011-11-28 Stocks Buffeted by Euro Fears and Super Committee Failure by Bob Doll of BlackRock Investment Management
Equity markets sank sharply last week as the European debt crisis worsened and the US super committee failed to come to an agreement. Congress still has an opportunity to address deficit reduction, but of course the fact that all of this is occurring with the backdrop of the 2012 elections means that uncertainty levels are elevated. As a result, unless and until more clarity emerges, markets are likely to remain somewhat trendless in the near term.
2011-11-26 With Rising Wages, Will China Remain a Manufacturing Hub? by Frank Holmes of U.S. Global Investors
In 2010, countries such as Hong Kong, Japan, South Korea and Germany depended on China for data processing, apparel, and iron and steel exports. Chinas largest import partners in 2010 were Japan, South Korea, the U.S., Germany and Australia. For those companies not already doing business in China, theres one dominant factor that shows they should start: the vast domestic market. Companies may be able to find a cheaper workforce in Bangladesh, India or Sri Lanka, but being located in China allows convenient access to what is rapidly becoming the worlds largest consumer market.
2011-11-14 The European Stutter Step by Milton Ezrati of Lord Abbett
Markets have shown a mixed response to Europes agreement on sovereign debt. On the positive side, Germany, France, European banks, and other members of the eurozone have shown more direction, control, cooperation, and concerted action than previously, and in so doing, have taken a step to avoid panic and what could easily have become a global financial meltdown. But still, Europe and, consequently, the rest of the world remain far from out of the woods. This latest step is inadequate. To get a grip on the crisis, the ECB will need to add its financial resources.
2011-11-11 The Many Factors Fueling a Return to $100 Oil by Frank Holmes of U.S. Global Investors
The IEA says trends on both the oil demand and supply sides maintain pressure on prices. We assume the average IEA crude oil import price remains high, approaching $120 per barrel (in 2010 dollars) in 2035 (over $210 per barrel in nominal terms). Thats a distant projection but it certainly illustrates why you should consider investing a portion of your wealth in oil.
2011-11-07 Fragile China by Milton Ezrati of Lord Abbett
There is a certain irony in this situation: Washington seems ready to start a trade war with China, while investors, for other reasons, worry over a crackup in this critical economy and crucial engine of global growth. And there is reason to worry about China. Inflationary pressures have grown, threatening to undermine that economys competitive edge, slow or stop the pace of economic growth, and jeopardize asset values. Chinas anti-inflation policies independently threaten economic growth prospects and also asset prices.
2011-10-29 European Summit: A Plan with No Details by John Mauldin of Millennium Wave Advisors
The market reacted like yesterdays announcement was the Second Coming of the Solution to End All Solutions. But if you look deeply there is more to the market "melt-up" than simple euphoria and relief. What you find is a very disturbing unintended consequence that will come back to haunt us. The finger points to derivatives and credit default swaps. This week, we look at gamma and delta and other odd entities that may be behind the real reason for the market response, as we march inexorably toward the final chapters of the Endgame.
2011-10-27 FPA Crescent Fund Q3 2011 by Steven Romick of First Pacific Advisors
An unresolved European sovereign and financial dilemma, in concert with a U.S. economy thats been a disappointment compared to the once-rosy projections of most economists, caused global markets to retreat in the third quarter. Crescent declined as well, but it fell 30% less than the U.S. market for the quarter and 40% less in the year-to-date period. The U.S. markets actually fared quite favorably and Crescent more favorably still when viewed in context of the global financial upheaval.
2011-10-25 Time to Put Your Shades On by Pamela Rosenau of HighTower Advisors
The paradox of the stock market is that higher prices attract buyers, while lower prices attract sellers. This herd-like behavior is confirmed by peers and exaggerated even more now by social media outlets. The most important thing to acknowledge in these markets is to be tactical and buy on weakness. In our current yield starved environment, I have focused on growth and income (two such scarce resources these days) in both dividend paying large cap stocks and energy infrastructure MLPs.
2011-10-24 Markets Gain Ground, but Remain Range-Bound by Bob Doll of BlackRock Investment Management
S economic data has shown some encouraging signs in recent weeks. Retail sales figures and jobs indicators have trended to the positive, which has caused a number of economists to upgrade their forecasts for third- and fourth-quarter gross domestic product growth. The overall sense of economic uncertainty remains high, but it is looking increasingly likely that the United States will avoid a double-dip recession.
2011-10-20 U.S. Large Cap Value Market Commentary by Rick Helm of Cohen & Steers
Our outlook for the U.S. economy remains cautious in the face of Europes possible slide back into recession and slowing growth in China. Conflicting economic data are likely to persist and contribute to market volatility. On a positive note, earnings remain decent and dividend payers are well positioned to raise payouts, which should attract investors, as yield is becoming a favored strategy. However, stock buybacks have become a competing use for excess cash once again, as evidenced by Berkshire Hathaways announcement.
2011-10-19 Developed Asia Pacific: Economic Review September 2011 by Team of Thomas White International
Developed Asia Pacific nations continued to face headwinds to growth in September. With factory output across the world slowing down to a trickle, major developed Asia Pacific economies ranging from Japan to New Zealand started witnessing pressure on their economic output. As exports still act as the backbone for many of Asias developed countries, a global decline in manufacturing is causing concerns. A slowdown in the U.S. and Europe also cast a shadow on the economic prospects for Asian nations.
2011-10-18 Volatility Rears its Ugly Head by Jeremy Blackman of Hester Capital Management
The major debate in the financial markets today revolves around whether or not the U.S. is going to experience a double-dip recession. We do not expect a recession, but if that does happen it should be a shallow one. We remain cautiously optimistic that the politicians in the US and Europe will eventually do the right thing as the consequences of not acting in a prudent and responsible manner are not pretty. We anticipate that markets will continue to be volatile until Europe finds resolution for its problems and until politicians across the globe learn to compromise across party lines.
2011-10-17 Connecting the Dots by Pamela Rosenau of HighTower Advisors
The efficient frontier provides the optimal expected return for a portfolio for a given level of risk, or the lowest level of risk needed to achieve the optimal expected return. Over the years, investors have come to perceive that certain asset classes with higher risk premiums are more risky than others. We believe what many view as traditional asset allocation may be vulnerable going forward. In short, it is dynamic, not static. In todays negative real interest rate environment, investors will be well served by investing in certain asset classes perceived to be more risky.
2011-10-14 Europe Moving In The Right Direction by Monty Guild and Tony Danaher of Guild Investment Management
The rally in European and world stock markets that began on October 5th appears to be continuing for several practical reasons. Many stocks just got too cheap. Europes policymakers have expressed language the markets want to hear. Ans Chancellor Merkel and President Sarkozy have given the world reason to believe that Europe will gradually implement a comprehensive program to recapitalize European banks. The combination of these factors has made us feel more constructive about markets. Don't forget gold, our advice continues to be buy the dips and take some profits on spikes.
2011-10-13 Pointing Fingers: Can Europe and the U.S. Work Together to Solve the Financial Crisis? by Team of Knowledge @ Wharton
Even as U.S. officials and investors watch Europe struggle to shore up its financial system and avert another shock to the global economy, signs of a subtle transatlantic "blame game" have surfaced. Experts from Wharton and elsewhere note that although there are no immediate answers to the mounting crisis -- and its impact on capital markets in the U.S. -- it's clear that any finger pointing needs to be replaced by a sense of urgency and mutual cooperation before solutions can be found.
2011-10-11 A Q3 Client Letter Drawing on Buffett’s Optimism 'The U.S. is coming back now' - and why three inves by Dan Richards (Article)
Since 2008, each quarter I have posted a template for a letter to clients; these are consistently among my most popular articles. This quarter's letter provides clients with perspective on the recent market turmoil.
2011-10-07 Third Quarter 2011 Market Commentary: This is Not 2008 by Robert Stimpson of Oak Associates
The discussion on how to contain the sovereign debt crisis torments the market, which would prefer a decisive solution administered by a powerful and determined financial authority. While stringing the situation along is painful in the near-term, it may actually allow other struggling countries in Europe time to right their budget problems and enact measured reform before bailout funds are required to force them to act. Regardless, an end to the debate will come and financial markets will recover. We intend to benefit from it.
2011-10-06 Be Mindful of the Markets History by Matt Lloyd of Advisors Asset Management
When markets are not able to determine efficient use of capital and transfer excesses to underutilized areas, concern arises. We often hear about the rise of Socialism in the United States, and though compared to more free-market periods from years ago, there may be some accuracy to it; the relative capitalism benchmark versus other economies is still profoundly different. As evidenced by the situation in Europe it should serve as a warning sign for elected leaders setting more protectionist policies in light of our pursuit for free market forces.
2011-09-30 The Impact of Uncertainty by Teresa Kong of Matthews Asia
While markets act like toddlers over the short term, what are the key drivers over the long term? The impact of the European crisis on global growth will be the key determining factor on market performance. Small, open economies such as Hong Kong, Singapore and Taiwan will likely be more greatly impacted. Countries with domestic consumption as large drivers of GDP, China, Indonesia and India, might be relatively sheltered due to their relatively large internal markets. While risk aversion may cause markets to overreact in the short term, we believe long-term structural growth should continue.
2011-09-30 Managing Emotions in Today's Marketplace by Frank Holmes of U.S. Global Investors
One positive point is the Conference Board Index of Leading Economic Indicators, which is also known as LEI. Historically, the LEI has proven to be a reliant indicator of recessions and recoveries. The index deteriorated ahead of the 2001 global recession, and again in early 2007 and 2008 before the global financial crisis and associated recession began.
2011-09-23 Twist Paves the Way for QE III by Peter Schiff of Euro Pacific Capital
But many of those who oppose QE3 do so because they believe the economy doesnt need more stimulus not because the stimulus itself is causing the economic weakness. As a result when the economy deteriorates, support for QE III could grow. In the end QE3 will likely be far more popular than another bank bailout, which may be on the table if the Fed fails to rescue the banks it may be pushing over the edge with Twist. But our zombie economy does not need to be perpetuated by more QE. It must be allowed to die so that a living, breathing, self-sustaining economy can replace it.
2011-09-23 Turkey Gets an Upgrade by Frank Holmes of U.S. Global Investors
The IMF offered a sober assessment of the global economy this week when it released the September 2011 update of its World Economic Outlook. The IMF stated the global economy is in a dangerous new phase, citing two main downside risks: The possibility the crisis in the eurozone will be too much for the regions policymakers to handle, and soft economic activity in the U.S. is due to a weak housing market, deteriorating financial conditions and a political impasse regarding fiscal consolidation. Accordingly, the IMF cut its projections for global growth to 4 percent through 2012.
2011-09-19 Market Preview - What to Look for This Week by Mohamed A. El-Erian of PIMCO
Global markets again find themselves in the uncomfortable back seat of a car driven erratically by policymakers. The hope is that policy responses in both America and Europe will enable them to build on last week's solid gains and, thereby, improve the outlook for jobs and economic growth. This can happen if most/all of what follows materializes. Top-down issues are still important drivers of markets. It is not a comfortable place for markets given the recent history of recurrent policy shortfalls and debacles. Yet it is also reality for now.
2011-08-26 Confidence Counts by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab
Most of the normally historically-telling leading indicators continue to point to the US avoiding a recession. However, risks are clearly heightened as continued erosion of confidence could push perception into reality. The Fed continues to be divided on whether to attempt further monetary stimulus. We question if any efforts will have the desired impact. The Obama Administration and Congress continue to scramble to be seen as doing something to help, but also have limited policy options. European policymakers seem oblivious to the erosion of confidence.
2011-08-19 Paris Accord: Much Ado About Nothing by Komal Sri-Kumar of TCW Asset Management
As I have emphasized repeatedly in the past, none of these band-aid measures is likely to end the European debt crisis. Several countries of the region are excessively in debt, pure and simple. When that is the case, the solution ought to be a reduction in the level of debt through the exchange of existing debt for discount bonds, reduced-interest rate bonds, or equity. Unless the European powers recognize and act on this reality, European debt will continue to be a millstone around the global economys neck.
2011-08-19 Emotion in Motion by Rob Isbitts of Carson Wealth Management Group
We don't normally feel compelled to discuss short-term market activity. However, once in a while a month comes along that is very different from most other months. This is one of those months. With the S&P 500 down over 12% for the month of August (as of 2:30PM on Friday, 8/19/11), and Europe's economic and banking system woes weighing on the markets again, here are our current thoughts on global markets and our current positioning.
2011-08-17 Readers Questions Answered Part VII by Mark Mobius of Franklin Templeton
Many of you may be particularly concerned about the developments related to debt in the eurozone and theU.S.over the last few weeks. Id like to take this opportunity to share my thoughts on these events and respond to a couple of reader questions. To me, the European debt situation does not seem as serious as the U.S. debt crisis, both in terms of scale and the possible impact on the global economy. As such, I believe the worlds focus should really be on the U.S. debt crisis. We also have to remember that the tolerance for debt is generally affected by investor confidence levels.
2011-08-17 Weekly Market Commentary by Scotty George of du Pasquier Asset Management
Has the markets crisis been averted because Congress passed a debt-ceiling bill or because the bear panic last week wiped out a lot of doubters? Not at all. One can forget the immediate knee-jerk responses. The most powerful ally we have now is time. The indecision and ambiguity which triggered the panic is still firmly entrenched in boardrooms and kitchens around the globe. Multiple solutions only confuse the markets direction. While spending and stimulus are probably whats needed to avert a recession, neither is going to happen in this climate of political intractability.
2011-08-15 Panic Is Not a Strategy - Nor Is Greed by Liz Ann Sonders of Charles Schwab
Originally published in 2008, it's time for a refresher about the perils of panic.
Asset allocation, diversification and rebalancing are as close to a "free lunch" as you can get as an investor.
ThIn world where time horizons have shrunk precipitously, think longer-term.
2011-08-10 Run, Ride or Buy? What Should Investors Do? Dont Sell on Mondays! by Frank Holmes of U.S. Global Investors
With trillions of dollars in debt acting as a ball-and-chain for much of Europe, the U.S. and the rest of the developed world, must detoxify their balance sheets before hitting the ground running. On the other hand, emerging market economies carry low levels of debt and operate like a cash business, making them the final frontier for strong economic growth. A key reason is emerging market governments have the long-term policies in place to facilitate growth of their economies.
2011-08-05 Portfolio Commentary Q211 by Jay Compson of Absolute Investment Advisors
The Fund's overall positioning and exposures have changed very little over the past few months as our managers continue to see almost all asset classes priced to deliver unsatisfactory long term returns. There is no real change in overall thoughts from our previous commentary except to add that many of the issues and risks we have discussed are starting to become more significant and weakening fundamentals are finally becoming more apparent to investors. Ironically, the things that have created short term rallies of late are largely noise and are less positive than they were 3-6 months ago.
2011-08-04 The Five Horsemen of the Economic Malaise by Craig Hester of Hester Capital Management
The unwinding of the economic malaise will take years, and it will be a painful - but necessary-process. There is much fear and anxiety reflected in the financial markets. Many of the world economies are in a state of disequilibrium, with too much debt, facing high unemployment and sluggish growth. Policy options are limited, and politicians lack the courage to act. But out of such times come opportunities. We live in a world of instant news and an acute short-term focus. One of the keys to investment prosperity is to manage money with a long-term perspective while balancing risk and return.
2011-07-18 Matter over Mind by Herbert Abramson and Randall Abramson of Trapeze Asset Management
As the markets declined in the quarter, stocks became significantly oversold from the negative psychology resulting from the negative headlines. A mindset of fear. CNBC recently reported that investors were more concerned about the economy than at any other time during the past five years; a CBS poll found that 39% of Americans believe the economy is in a state of permanent decline. The mind can play tricks. But when perceived risk is so great it is typically reflected more than warranted in depressed share prices. The news doesn’t have to be good, just not as bad as everyone believes.
2011-07-18 Chairman Bernanke: A White Knight or one of the Four Horsemen? by Matt Lloyd of Advisors Asset Management
There are some underlying forces that we believe to be a better indicator of the future than the headline risks that pop up every hour. Chairman Bernanke’s announcement that more support is needed affirms our view that they will remain accommodative for some time and analysts’ estimates have risen, even though top-down analysts have dropped a bit. The amount of liquidity continues to rise even as markets are up year-to-date. At the end of the day, anxiety and apprehension are key components in the building of the wall of worry.
2011-07-08 And That's The "QUARTER" That Was... by Ron Brounes of Brounes & Associates
April 2011 picked up exactly where the first quarter ended as equities enjoyed their best month of the year and bulls appeared to be firmly in control. Then a funny thing happened on the way to big gains (actually a few not-so-funny things)…Stocks tumbled and key indexes dropped for seven out of eight weeks as the quarter neared a close and investors looked to the safe-haven of treasuries (despite the credit rating concerns). And just when all hope seemed lost…a new Greek solution emerged, manufacturers seemed to get back on track, and the Fed ended the QE2 stimulus to little fanfare.
2011-07-06 Sparks: Are Stocks Telling a Better Story For the Second Half? by Liz Ann Sonders of Charles Schwab
Investors continue to focus on the macro … but the micro is telling a much better story.
There was lots of good micro and macro news last week.
Is the market's rally sending a signal that the second half of the year is looking up?
2011-07-01 The Ultimate Shell Game by Scotty George of du Pasquier Asset Management
As governments are forced to shift policy from spending to saving, the instruments they have at their disposal become obsolete without consumer support and/or confidence. The acquisition of “things” paid for by leverage, margin, and debt is a fruitless endeavor in today’s climate. As a result a truer “new paradigm” must develop which: Shifts the focus from hard asset leverage to savings and cash, Raises secular interest rates, Globalizes investment capital, trade, and profitability and Provides for a fairer, equal playing field in financial assets.
2011-07-01 Schwab Market Perspective: Dealing with Debt by Liz Ann Sonders, Brad Sorensen, and Michelle Gibley of Charles Schwab
Global governments are dealing with rolling debt crises equaling shaky investor confidence. We are concerned that many of the solutions weigh on growth prospects, but are hopeful about short-term resolutions that restore business confidence and lead to more investment and hiring. The Fed continues to hold steady, keeping short rates near zero and likely reinvesting maturing Treasury securities after QE2 ends. Greece passed the austerity package required to get short-term funding but much more is needed. And while the focus has been on Europe, it may be time to focus on the Asian region.
2011-06-27 Higher Commodity Prices and the End of Economic Growth Without Inflation by Mihir P. Worah of PIMCO
Global inflationary patterns may shift amid higher commodity prices.
We expect commodity prices to be generally rising going forward, though with volatility and differentiation among commodities.
Emerging markets going through a particularly commodity and energy intensive phase of growth may affect what developed-world consumers pay for commodities.
Currencies are another factor. If developed-world policymakers attempt to make their economies more competitive via a cheaper currency, that could lead to higher inflation for those that are net importers.
2011-06-23 Fixed Income Commentary: Recent High Yield Selloff: Caution or Opportunity? by Jamie Farnham of TCW Asset Management
The spring season has tested the mettle of the high yield market. A common inquiry on investor minds of late is whether this is a short-term bump on a longer journey or alternatively that risk is rising for high yield investors. This note touches on (i) relative value, (ii) fundamentals and (iii) the potential interest rate effect on high yield.
2011-06-21 A Replay in the Markets by Matt Lloyd of Advisors Asset Management
The one concern we cannot project, and one that every investor should be cognizant of, is the contagion risk of the potential default of Greece or any of the other troubled European issues. It won’t be necessarily the default itself but the reaction to it. This is more than likely the catalyst for the large amount of liquidity being built up in the banking system so as to mitigate another credit crunch that paralyzed the global markets in 2008. It also explains why A-rated Financials have seen their spread to the 10-Year Treasury widen from 121 basis points (bps) in May to a current 147 bps.
2011-06-17 Will Gold Equity Investors Strike Gold? by Frank Holmes of U.S. Global Investors
While the party continues for gold bullion prices, stocks of gold companies have been a no-show. The NYSE Arca Gold Bugs Index (HUI) has fallen more than 13 percent year-to-date and the Philadelphia Gold & Silver Index (XAU) has toppled more than 16 percent. Companies such as High River Gold Mines, Jaguar Mining and NovaGold Resources are off 45 percent from 2007-2008 highs. This has been exacerbated in recent weeks making it a hot topic of discussion among investors. This chart shows gold equities of all market capitalization sizes were holding up quite well until late April.
2011-06-14 A Cautionary Tale from the World's Most Influential Economist by Dan Richards (Article)
Raghuram Rajan was recently cited by The Economist as having the most important ideas for the post-crisis world. In this interview, he identifies key policy issues the Obama administration must confront. This is a transcript of the interview.
2011-06-13 Oil Prices—Fundamentally Unhinged by Milton Ezrati of Lord Abbett
Oil prices spiked up more than 40% between September 2010 and early May, before suddenly giving back half the gain within the space of a week. Analysts naturally sought to explain the wild price swings with supply and demand. But, as is so often the case with commodities the fundamentals mean less than speculative money flows. These explain both the run up and the retreat and why prices moved so far so fast. Speculative motivations, more than the fundamentals, will set future price movements, though the fundamentals, when they influence, should keep the direction pointing down more than up.
2011-05-20 Weekly Market Commentary by Scotty George of du Pasquier Asset Management
Last week, I wrote about a phenomenon in global markets “at the top” as being almost like perpetual motion inertia, constant movement, seemingly ending up static. Why does that exist, and what can we do to enhance its portfolio benefit and to reduce its incumbent risk? I believe that today’s risk derives from overvaluations created from “efficiencies” which magnify profitability, but don’t reflect declining top line revenue or demand. Indeed, as stock prices have migrated upwards, relative strength quotients within my proprietary measurements have disconnected, instead moving downwards.
2011-05-04 What Happens When China Becomes a Net Food Importer? by Adam Wolfe of Roubini Global Economics
China is the world’s second-largest producer and largest consumer of grains, and it remains broadly self-sufficient despite rapid urbanization. Increased paychecks mean a smaller share of income goes toward food purchases, and consumers can afford more meat and dairy products. However, since it requires several calories of grains to produce a single calorie of meat for final consumption, China’s total grain consumption has increased about 2% annually on average since 1980. China’s ability to meet its rising grain demand with domestic production is reaching its limit.
2011-04-26 Why Demographics will Drive Global Growth by Sam Parl (Article)
When economic pundits trade heated predictions about the massive economic shifts we see internationally, it is easy to forget the subtleties that shade their forecasts. One such shadow overhanging any intelligent debate about our global economic future is global age demographics, according to Harvard Professor Richard Cooper.
2011-04-22 Could the U.S. Return to 1970s Style Inflation? by Scott Colyer of Advisors Asset Management
The U.S. appears to be at the crossroads of fiscal and monetary policy. Many are painting a very bleak picture of the future of the dollar, U.S. credit and the validity of the U.S. economy as the model for the world. Could the U.S. return to 1970s style of inflation? The answer is that, although the possibility is there, the probability that such a high level of inflation returning any time soon is actually very low. Is the Fed conducting monetary policy that is inflationary in nature? Yes they are, but let’s not forget why they are doing this. The Fed is engaged in the avoidance of deflation
2011-04-20 Is Europe at the Tipping Point? Sol Sanders & Bill Alpert on Keynes, Keynesianism -- and Keynesianit by Team of Institutional Risk Analyst
With the world preparing for the collapse of the post-WWII, post-Bretton Woods economic order, we thought it might be useful to look at what Keynes actually said. We depart from our optimism due to the situation in Europe. Forget the threat of a ratings downgrade by S&P, Washington on debt ceilings or our part-time POTUS, the final collapse of the southern states of Europe is accelerating. Most banks in the EU are insolvent and the states supposedly backing them cannot access the global markets. The collapse of the EU bank bailout effort could be the next catalyst for global contagion.
2011-04-11 Despite Near-Term Risks, Stocks Remain Resilient by Bob Doll of BlackRock Investment Management
The preponderance of the economic and market-related news skewed to the negative last week, with an additional earthquake in Japan, rising oil prices, an interest rate hike by the European Central Bank (ECB), escalating debt problems in Europe and increasing noise about the since-averted potential federal government shutdown. Despite this backdrop, however, US equities remained resilient and were roughly flat for the week, with the Dow Jones Industrial Average up marginally to 12,380, the S&P 500 Index down 0.3% to 1,328 and the Nasdaq Composite down 0.3% to 2,780.
2011-04-06 Let Them Eat Crude by Robert Stimpson of Oak Associates
World events over the past month have received a lot of media attention, but few accounts have emphasized the long-term effects on equity markets. The revolts in Tunisia, Egypt, Libya, unrest in Bahrain and Yemen, and the earthquake in Japan are significant for equity investors going forward. While most of the media have focused on the human aspect of the events, the influence of food inflation, rising oil prices, and the state of the US dollar have been overshadowed by the regime changes and nuclear disaster in Japan.
2011-03-31 Why Africa, Why Now? by Larry Seruma of Nile Capital Management
There are a number of reasons that Africa is an excellent investment opportunity – Nile discusses a few that highlight why now is a good time to invest in African markets.
2011-03-25 Unrest and Turmoil = Rising Oil Prices by Monty Guild and Tony Danaher of Guild Investment Management
Nine of the eleven nations sharing land or water borders with Saudi Arabia (SA0 have had demonstrations. Trouble is likely to surface in SA because much of the country’s wealth is located under lands where Shia Muslims are in the majority. The ruling House of Saud is Sunni Muslim. The distrust and bad blood between the two sects predates oil discovery and is not likely to be solved with oil money. The political events are about freedom from repression but also represent a basic struggle between these two Muslim groups for control of revenues from the huge oil fields in that part of the world.
2011-03-21 Equity Market Bounce-Back -- Don't get Too Excited by David A. Rosenberg of Gluskin Sheff
Between the put-to-call ratio and the 40% share of stocks trading below their 50-day moving average, the U.S. stock market became hugely oversold. Plus we had the skew from the quadruple-witching session. And the cease-fire announced in Libya and the FX intervention to reverse the yen’s strength provided some fodder for the shorts to cover. But trend lines have been broken, portfolio managers have little cash to work, and according to a ML-BAC survey, we had a net 67% of global portfolio managers overweight equities against their position. Plus, the world is still a very uncertain place.
2011-03-14 Weekly Market Commentary by Scotty George of du Pasquier Asset Management
Despite last week’s contraction in global equity prices, the activity seemed mainly focused upon energy stocks and the turmoil in Libya and the Middle East. Of course, the world is also shocked by the earthquake tragedy in Japan. More significantly, there seems to be no cohesion of thought about whether these disruptions are ultimately (1) good for shareholders (2) bad for economic recovery. Instead, the debate rages on as to the sustainability of any short market rallies or the viability of real economic recovery in the face of pricing pressure upon commodities, particularly energy.
2011-03-14 Riots, Oils, and Economics by Milton Ezrati of Lord Abbett
The turmoil in the Middle East goes on, and, though oil has continued to flow uninterrupted, understandable uncertainties have bid up crude and gasoline prices anyway. A barrel of crude now costs considerably more than straightforward supply/demand fundamentals would imply. And as long as the uncertainty persists, prices will almost certainly stay high. Despite this, three aspects of the situation seem more definite. First, fuel cost pressures may slow, but they are unlikely to stop the American and global economic recovery.
2011-03-11 The Seven Immutable Laws of Investing by James Montier of GMO
This dearth of assets offering a margin of safety raises a conundrum for the asset allocation professional: what does one do when nothing is cheap? Personally, I’d seek to raise cash. This is obvious not for its uninspiring near-zero yield, but because it acts as dry powder – a store of value to deploy when the opportunity set offered by Mr. Market becomes more appealing. And this is likely, as long as the emotional pendulum of investors oscillates between the depths of despair and irrational exuberance as it always has done. Of course, the timing of these swings remains as nebulous as ever.
2011-02-23 FPA Perennial Shareholder Letter by Eric S. Ende of First Pacific Advisors
The major issue affecting global markets continues to be the amount of debt outstanding worldwide. Governments and consumers in many of the world’s developed countries are under the microscope as lenders question whether these borrowers will be able to make interest and principal payments on their loans. We expect these concerns to remain for some time to come.
2011-02-22 Revolution and Oil Do Not Mix by Charles Lieberman of Advisors Capital Management
The Middle East uncertainty is already roiling markets, driving up the price of crude and gold. Longer-term, whatever new regimes ultimately emerge in power, they will need to remain large oil producers. How else will they be able to obtain the revenue they need to feed their people and to help their economies? Even Iran remains a large exporter of oil to pay for the global expansionist policies of the mullahs. It is the disruptive intermediate term that is so uncertain. We can only watch and hope that it passes quickly with little bloodshed.
2011-02-22 The Global Economic Impact of this Weekend's Developments by Mohamed A. El-Erian of PIMCO
In the short run, regional developments will be stagflationary for the global economy. In the next few days, markets will react to the changed outlook for the region and the global economy. Over time, market apprehension is likely to give way as the impact of greater long-term stability in a key part of the world is felt.
2011-02-14 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn
No one knows what the longer-term direction of the Egyptian state will be, and as a consequence the investment outlook now has an additional source of uncertainty. As far as the global economy is concerned, the failure of the European leaders to agree on to how to handle future sovereign debt crises has cast a shadow once again over Portugal and even Ireland. The problem that Ireland poses is that the elections to be held shortly will bring about a new government who may wish to renegotiate their bailout agreement.
2011-02-08 The Key Ingredient to Effective Communication by Dan Richards (Article)
When it comes to communicating with clients, too often we revert to the habit of using words alone. To maximize the impact of your communication, you need to help others visualize your message.
2011-01-24 Weekly Market Commentary by Scotty George of du Pasquier Asset Management
There is a lot of talk about the direction of interest rates and the cost of money. Sometimes, exogenous influences also exert influence over monetary factors. Today, tightening supplies of natural resources have created a subterranean inflation whose gross result has been to raise prices at the production and consumption sites. Corn, sugar, coffee, soybeans and other crops are at their lowest reserve levels in a generation. Demand, however, has not ebbed.
2011-01-18 Bubble-Liscious by Cliff W. Draughn of Excelsia Investment Advisors
In the world of investing there is no substitute for taking action. Therefore, as your advisor, I seek to understand our bias and attempt to make rational and prudent decisions. Savvy investors understand the risks inherent in their assumptions and adopt a more businesslike approach to investing by reducing and hedging risk. Investors are typically surprised when facing a loss, and the psychological power of losses far outweighs the power of gains. Therefore remember the critical rule of compounding: Don’t lose money
2011-01-10 Weekly Commentary & Outlook by Tom McIntyre of McIntyre, Freedman & Flynn
The outlook for the future of the economy remains upward. The latest from the Economic Cycle Research Institute shows the highest level of year over year growth rate since last May (see chart below). Consequently, the economy is improving, but not quickly enough to fundamentally lower the unemployment rate.
2011-01-10 Investment Commentary by Bob Doll of BlackRock Investment Management
We see a number of potential risks for the economy and the markets in the year ahead, including sovereign debt issues, emerging markets inflation and the possibility of higher tax rates, but we remain positive on the overall environment. Inflation should remain low throughout 2011, economic growth should accelerate slightly with the quality of that growth improving, and corporate earnings should remain strong an environment that should provide a solid backdrop for stocks to post further gains over the course of the year.
2010-12-13 Loyal Opposition by Scotty George of du Pasquier Asset Management
Each of the recent “relief rallies” draws many into thinking that the worst is over, at least for equities. I believe, however, that investors are putting too much emphasis upon short-term consequences to the exclusion of looking through the wider aperture. Of course, during the holiday season we are all searching for “good cheer,” but market cycles that are unsupported by fundamentals are not “rallies,” but bear traps.
2010-12-09 Come On Rich! Our Take On Richard Bernstein’s Themes for 2011 by David A. Rosenberg of Gluskin Sheff
It is extremely difficult to judge what part of the economic cycle we are really in. If you look at the unemployment rate, the workweek, the industry CAPU rate, the levels of consumer confidence, housing starts and sales, you would think we were still in a recession. But if you looked at profit margins and the ISM index, you would come to the conclusion that we were mid- or even late-cycle.
2010-12-06 Trade Wars by Milton Ezrati of Lord Abbett
Trade tensions seem to intensify daily, especially between the United States and China. Congress not too long ago upped the ante, labeling China a "currency manipulator." both the United States and China could get around immediate passions and politicking and find a basis for accommodation in their common, longer-term goals. In this regard, it is at least modestly encouraging that the International Monetary Fund (IMF) has become involved in the China–U.S. currency dispute.
2010-11-11 Global Markets Up, Up, Up and Away by Monty Guild of Guild Investment Management
The world markets moved like Superman last week. They lifted off and moved higher in a decisive manner. In the ongoing contest between bulls and bears, the bulls have had the upper hand in many markets. Wall Street also moved firmly into the bullish camp with U.S. stocks eclipsing their April 2010 peaks. To us this means that the technical short-sellers who had been bearish on U.S. stocks and expecting a correction bought back their short positions and took their losses.
2010-11-04 QE2 Is Likely to Be More Successful than QE1 by Paul Kasriel of Northern Trust
The theory behind quantitative easing is that an increase in the quantity of combined central and commercial bank credit will lead to an increase in nominal aggregate spending on goods, services and assets. Indeed, the correlation coefficient between percentage changes in the annual average of combined Federal Reserve and commercial banking system credit and the percentage changes in nominal U.S. GDP from 1960 through 2006 is relatively high, at 0.62. This correlation coefficient is reduced to 0.49, however, when the period is extended through 2009. Northern Trust explains why.
2010-11-02 Debtor Bailouts: Lesson from Brussels by Komal Sri-Kumar of TCW Asset Management
The 440 billion ($617 billion) European Union bailout package approved earlier this year provided new loans to debtor nations from the EU and the IMF in return for pre-agreed austerity programs. Germany, the major creditor nation and the biggest single contributor to the bailout package, agreed on Friday to provide the fund permanent status, but only if the debt reduction cost were shared with private investors. A variation of the decision that Germany made last week is likely to confront President Obama during the next two years as the U.S. deals with its own bailout programs.
2010-10-26 Look For the Silver Lining by Christian Thwaites of Sentinel Investments
It is not a good time to buy and hold but there should be excellent one-to-two-year holding periods. Pick stocks with strong financials. Be prepared to reallocate. Stay invested in bonds: With the Fed ready to become buyer of first resort, we could see the 10-year yield fall below 2.5 percent. Real yields are high. However, do not let the search for yield compromise liquidity. The market trades on a narrow front and low volume. Less than 112 stocks account for 50 percent of turnover. That leaves thin numbers for the remaining 17,000 listed companies. Expect volatility.
2010-10-12 Why Warren Buffett is Optimistic: A Quarterly Letter to Send Clients by Dan Richards (Article)
Dan Richard's quarterly letter is designed to balance some of the extreme pessimism among many investors. Negative sentiment is understandable given the real challenges facing the U.S. and European economies, but is also a function of the overwhelmingly negative media coverage to which clients are exposed. To balance today's disproportionately negative views, you need hard facts.
2010-08-04 The Emerging Markets IPO Frenzy by Mark Mobius of Franklin Templeton
In recent years, we have seen a rise in initial public offerings in emerging markets as EM companies begin to recognize the advantages of going to the market to raise capital in order to expand and grow. Investors should proceed with caution, however, before chasing IPOs and short-term gains. Not all listings are created equal. There is generally a lot of promotion surrounding all new listings. It is therefore important to conduct your due diligence and evaluate the stock based on its fundamentals with a long-term investment perspective.
2010-07-20 Cash Investing: Considerations for Investing in a Low Interest-Rate Environment by Northern Trust Investments (Article)
Northern Trust's chief economist, Paul Kasriel, forecasts that interest rates will remain low for the remainder of 2010. Investors are looking for guidance on how they should best position their cash and fixed income portfolios to take this environment into consideration, and should consider the tradeoff between liquidity and yield. We thank Northern Trust for their sponsorship.
2010-07-02 And That's the Week That Was... by Ron Brounes of Brounes & Associates
So is the temporary pullback actually much more? Since setting recent highs in April, equities have tumbled over 15% and are dangerously close to official bear market territory (>20%). The dramatic volatility has forced many retail (individual) investors back to the sidelines and to the safe-haven of low-yielding treasuries. Then again, the summer months often bring significant price swings as traders head to the Hamptons and away from the daily grind (of flash trades).
2010-07-02 And That's the Quarter That Was... by Ron Brounes of Brounes & Associates
As the quarter began, the economy continued its trek toward recovery; confidence had returned to corporate boardrooms; and investors were pouring their “cash-on-the sidelines” back into risky assets. Just when all seemed right in the world again, tiny Greece (and huge BP) began dominating the headlines. (Remember when a mere volcano was big news?)
2010-06-30 Will Debt Problems Metastasize to ‘Core’ European States? by Nouriel Roubini of RGE Monitor
One of the major issues is whether the problems of the PIIGS will metastasize from the eurozone periphery into the “core” countries of the continent. This commentary focuses specifically on Belgium, which has the third highest debt-to-GDP ratio in Europe. It is uncertain how Belgium’s necessary belt-tightening measures can be implemented, particularly given the dim prospects of a durable political consensus.
2010-06-23 What a Flexible Yuan Means for the Economy by Nouriel Roubini of RGE Monitor
Even if the Chinese authorities allow two-way movement of the yuan against the dollar to reduce speculation, Chinese policies could support the U.S. Treasury market, commodities and risky assets more generally - especially if other emerging market countries take a cue from China and allow only gradual depreciation. However, a sharp appreciation against the euro and dollar without other policies to support Chinese consumption could contribute to much slower global growth and higher inflation as increased Chinese production costs are transmitted to G10 consumers.
2010-06-07 The European Disease by Niels C. Jensen of Absolute Return Partners
It should be blatantly clear that Greece is by no means the only country at risk of falling into the much dreaded debt trap. The United Kingdom, the United States, New Zealand, Spain, France, Portugal and Australia are all in dangerous territory and Ireland is in very deep trouble on this account. This cross-European contagion risk threatens the very existence of our banking system, and it is this risk that French and German leaders are thinking about when they say that Greece will not be allowed to go down.
2010-05-25 Return of the Nervous Weekend by Mohamed A. El-Erian of PIMCO
Having over-romanticized the cyclical bounce, some investors are now scrambling to reposition their overextended portfolios now that structural problems are undeniable. The disruption in financial markets is not a garden-variety market fluctuation. Instead, it’s an overdue recognition that the global economy faces an uncertain future that involves slower growth and greater government regulation. Structural problems require structural solutions. The question is whether policymakers in Europe will acknowledge this, or remain hostage to hope for an immaculate recovery.
2010-05-24 European Discord? by Komal Sri-Kumar of TCW Asset Management
German taxpayers have started to view the European Union merely as a 'transfer union,' where they incur tax hikes and spending cuts in order to make transfers that enable their southern neighbors to maintain social welfare provisions. Sooner or later, the political willingness to continue this pattern merely in order to sustain a common currency will cease. At that time, the choice will be to reconstitute the euro area, or agree that weaker nations with debt problems need to reduce and restructure their debts rather than pile on more.
2010-05-13 Reader' Questions Answered by Mark Mobius of Franklin Templeton
Mark Mobius responds to reader questions on emerging markets. Mobius notes that global markets tend to react to headlines in the short-term. At the end of the day, however, each country and each company has its own set of dynamics and fundamentals. Research is about identifying the differences among them. Key differentiating factors are often the basis for success in the long run. He also comments on the Greek debt crisis, political stability in Poland, reforms in Colombia and the recent death of Nigeria's president.
2010-05-11 Predicting Financial Crises by Charlie Curnow (Article)
MIT Sloan School senior finance lecturer Mark Kritzman thinks he has found a warning signal to predict the onset of financial crises in a new statistical model called the absorption ratio. The absorption ratio predicts systemic risk by measuring how tightly markets are coupled, and thus how vulnerable they are to the spread of negative shocks.
2010-05-11 Why Some Hedge Funds Made Money in 2008 by Robert Huebscher (Article)
Steven Drobny is the co-founder of Drobny Global, an international macroeconomic research and advisory firm that counts many of the leading global hedge funds and money managers as clients. He is also author of a recently released book that identifies why some hedge funds made money in the 2008 crisis, while the majority did not. In this interview, he discusses the common themes among successful strategies.
2010-05-07 Wild Ride by Mark Oelschlager of Oak Associates
The market went on a wild ride Thursday. The fundamental explanation for the selloff and the correction that began in April is the sovereign debt problem in Europe. At times like this, it is important to remember that stock prices represent the discounted value of a firm's future cash flows. Earnings season is winding down, and first quarter profits have been very strong, even though revenues are just starting to recover to previous levels. Despite the myriad of worrisome big-picture issues, corporate America is healthy and companies are trading at reasonable valuations.
2010-05-06 Global Market Correction Has Begun! by Komal Sri-Kumar of TCW Asset Management
The upward march of global equity markets in recent months is unsustainable. While U.S. corporate earnings have recorded healthy increases in recent quarters and, thereby, have been supportive of equity prices, the worldwide macroeconomic backdrop has continues to cause concern. The risks include, but are not limited to, a surge in the level of sovereign debt, a plunging dollar as foreign holders decide to cut their exposures in U.S. Treasury obligations, and a surge in U.S. Treasury bond yields.
2010-05-06 Chipan? by Team of Emerald Asset Advisors
In this commentary, Emerald responds to a reader question about China and Japan. Emerald says that equities in both countries are overvalued, but that this is less important than the fact that buying pressure is still outweighing selling pressure. The long-term ascension of the Chinese economy is one of the most prominent secular themes in today's markets. Japan, on the other hand, like the U.S., faces an obvious mess. The ultimate ruler is price, however, and Japanese stock prices have stubbornly risen for many months without a long-overdue correction.
2010-04-25 Playing With Fire (A Possible Race to the Old Highs) by Jeremy Grantham of GMO
Is there a new bubble on the horizon in the US? Having shot through GMO’s fair value estimate of 875, Jeremy Grantham's first quarter letter asks whether current policies and conditions are pushing the S&P to approach its old highs. Included in the letter is a link to a video of an interview about investment bubbles, done with Jeremy by the Financial Times on April 19. The Letters to the Investment Committee XVI is part one of a speech given by Jeremy discussing the Potential Disadvantages of Graham & Dodd-type Investing.
2010-04-12 Richard Field on Covered Bonds and the Need for Better ABS Disclosure by Christopher Whalen of Institutional Risk Analyst
This commentary features a piece by Richard Field of TYI, LLC, a consulting and technology firm focused on filling information gaps created by financial innovation, on the need to level the disclosure playing field in the asset-backed security markets. Field says that giving investors anything less than daily data on loan portfolio performance is unfair. Meanwhile, the basic tools of machine-to-machine data transfer make daily reporting possible today, as evidenced by the XML-enabled Report of Condition and Income submission system at the Federal Deposit Insurance Corporation.
2010-03-19 Another Year Older... And Deeper in Debt? by Isbitts of Emerald Asset Advisors
Consumers continue to deleverage around the globe, as they have since 2008, and that deleveraging process is the underlying force behind financial markets. Despite the obvious short-term problems for markets everywhere, however, 2010 will be viewed in retrospect as a time for investors with long time horizons to start angling their portfolios toward a more positive long-term return than in the past decade. Continued low interest rates are starting to spark economic growth, and are making 'risk' assets more attractive.
2010-02-16 Two Sides of the Cuve by Scotty George of du Pasquier Asset Management
Scotty George of du Pasquier says in the Arlington Econometrics weekly market commentary that the disinflationary curve is at an inflection point, and that we are likely to see an upswing in the cost of money, savings rates and prices. All of this could usher in a new cycle of economic phenomena.
2010-02-16 Emerging Economies Continue to Show Promise by Milton Ezrati of Lord Abbett
Despite recent financial turmoil in response to policy initiatives in Washington and fears surrounding the finances of Portugal, Ireland, Greece and Spain, markets are up since the beginning of 2009, and are likely to grow this year. Emerging markets have the best prospects for growth, but their success depends on the precarious recoveries in the United States, Europe and Japan.
2010-02-16 Emerging Economies Continue to Show Promise by Milton Ezrati of Lord Abbett
Despite recent financial turmoil in response to policy initiatives in Washington and fears surrounding the finances of Portugal, Ireland, Greece and Spain, markets are up since the beginning of 2009, and are likely to grow this year. Emerging markets have the best prospects for growth, but their success depends on the precarious recoveries in the United States, Europe and Japan.
2010-02-10 World Markets Dance to China's Tune by Monty Guild and Tony Danaher of Guild Investment Management
Monty Guild and Tony Danager of Guild Investment Management say China is now recognized as the world's engine of economic growth, with $2.4 trillion in surplus capital and a fast growth rate. They expect China's GDP to grow at least 9 percent in 2010 even if the country's real estate bubble bursts.
2010-02-08 Tweedy Browne: Cautious in the Short Term, Optimistic in the Long Term by Team of Tweedy Browne
Robert Huebscher recaps a recent webinar by investment firm Tweedy Browne. The company's four managing partners explained their focus on downside risk, expressed a preference for high-quality dividend-payer stocks and
noted their emphasis on developed markets rather than emerging markets. The partners said they were optimistic about recovery in the long term, but cautious about the short term.
2010-02-02 China's Strong GDP Up 10.7% in the Fourth Quarter, but is Inflation on the Horizon? by Team of American Century Investments
American Century looks at the sources of growth in the Chinese economy its future projected growth rate. Easy credit and stimulus measures are potentially leading to a real estate bubble and inflation. Exports from China grew in December, following 13 months of decline, and “…the world may have to continue to rely on China as the biggest engine of economic growth.”
2010-01-28 Insights from EM Analyst Conference by Mark Mobius of Franklin Templeton
Mobius’ posting has comments from analyst Dennis Lim about the role of commodities and consumer spending in the BRIC economies, notably in China.
2010-01-23 Annual Report Letter to Shareholders by Hawkins and Cates of Longleaf Partners
Interestingly we have not been asked about the \'lessons of 2009.\' The first answer to that unasked question is that bottoms-up fundamental company analysis matters quite a bit. If it wer
2010-01-21 Unlocking Potential Through Corporate Governance by Mark Mobius of Franklin Templeton
I cannot stress enough my belief of the strength of the correlation between good governance and good corporate performance. As a result of this connection, we often see stock prices rise as a result o
2010-01-05 The Falling Dollar: Should We Worry? by Elisabeth L. Talbot, CFA (Article)
Over the past several months, it has become increasingly fashionable to refer to the decline of the U.S. dollar as another financial "crisis." Yet, given the current state of the global markets, declaring that the dollar's recent losses amount to a "crisis" is an overstatement, says Elisabeth Talbot in this guest contribution. To the contrary, current conditions surrounding the dollar are arguably supportive of - if not integral to - economic recovery.
2009-12-21 Predictions of 2010: The Best is Yet to Come by Christopher Whalen of Institutional Risk Analyst
2009-12-15 A Template for a Year-end Letter by Dan Richards (Article)
Many advisors have told Dan Richards they receive a positive response from the quarterly review letters they've sent over the past year based on the templates he has provided. Here's a template that can be a starting point for a year-end review letter.
2009-09-15 Mohammed El-Erian: We Have Not Reached Escape Velocity by Robert Huebscher (Article)
Kicking off this year's Schwab Impact conference in San Diego, Mohammed El-Erian told an audience of nearly 1,000 advisors on Sunday night that the US financial system has not fully emerged from the financial crisis. El-Erian and his co-presenter, Larry Fink of Blackrock, addressed a range of topics, including the safety of the financial system, the future of regulation, and the outlook for inflation.
2009-09-08 Infrastructure Investing by Michael D. Underhill (Article)
With global markets improving, liquidity returning to the credit markets, and valuations improving, the infrastructure market looks promising. In this guest contribution, Michael Underhill argues that infrastructure assets,when chosen correctly, can diversify an investor's portfolio because of their low correlation with other asset groups, their consistent returns coupled with lowered levels of risk, and their potential for inflation-linked returns.
2009-08-11 What the New Normal Means for Asset Allocation by Geoff Considine, Ph.D. (Article)
Bill Gross of PIMCO forecasts a New Normal - slow economic growth, higher inflation, and increasing correlations among asset classes. If this view is correct, what should investors do? Geoff Considine examines the implications for asset allocation and financial planning by stress-testing some well-known asset allocations to see how well they will serve investors in the forecast environment.
2009-08-11 At the Risk of Repeating Ourselves by Michael Lewitt (Article)
We have said before that Michael Lewitt's newsletter is a must-read, and this edition is no exception. Lewitt questions whether we are witnessing a summer calm before the storm, comments on the secured and unsecured debt asset classes, and opines on the abuses of unregulated dark pools of capital. We encourage you to subscribe to this valuable publication through the link we provide.
2009-06-23 Compelling Evidence That Active Management Really Works by Ken Solow (Article)
The majority of academic studies conclude that active management does not add value for investors. However, a closer look at how many studies were conducted reveals several flaws in their methodology that are not as well-known as the accepted conclusion about active versus passive management. Guest contributor Ken Solow revisits work by two Yale researchers showing the value added through active management.
